Thursday, October 04, 2007


As the title agent in a real property transaction, we are charged with disbursing net proceeds to the seller. We send each seller a pre-closing questionnaire while we are processing the title order. As part of that routine inquiry we give the seller three choices for their proceeds:
  1. our TCS escrow check
  2. cashiers check
  3. wire
We charge a banking related service fee of $25 for the cashiers check or wire. This fee is waived if the buyer uses our Choose & Save program.

We had two odd happenings this week related to seller proceeds which I would like to share. In each case, if the seller had discussed their needs with us ahead of time, we could have helped them avoid the trouble.

I'll start with the simple happening first. We had a seller request a cashiers check which we provided. The seller intended to use the funds to purchase another piece of real estate. The seller made the mistake of depositing the check in his bank account rather than simply holding the check and endorsing it over to the attorney or title agent handling his purchase. His problem is that his bank has a hold on the money and he can't access it. Since the cashiers check has already been deposited, we can't help him. He has to wait it out. If he had discussed his plans and needs with either our office or his bank, he likely would not be in this pinch.

A cashiers check is good funds but your bank decides how and when you have access to those funds.

Our second happening is more interesting. Our sellers were a husband and wife. There was nothing eventful at all about their transaction other than the request for a cashiers check. As usual, no big deal, we had the check ready for them at the table. It was joint ownership and so the check was issued in both of their names.

Here's what we didn't know:
  • We didn't know the husband was about to file divorce.
  • We didn't know that the wife was leaving that day with her boyfriend to travel across country and that they had no money and were planning to CASH the proceeds check.
  • We didn't know that the husband was under house arrest.
  • We didn't know that the husband had agreed that the wife should receive all of the proceeds.
  • We didn't know that neither of the sellers had bank accounts.

So, here's what happened:

Immediately after closing, the Realtor - knowing the full situation - walks the couple across the street to the bank. The Realtor had already made arrangements with the bank manager to open an account for the sellers, cash the check giving her $1000 and deposit the balance of the proceeds into the new account. The plan was that the funds would be wired to the wife when she got settled on the west coast. Got that?

OK, so these guys are in a real hurry because it's been almost an hour since Mr. Seller left the house - remember he's under house arrest - and he wants to get home before the police arrive.

They present their ID and the bank manager starts to open an account then WHAMMY! she is stopped in her tracks. She CAN'T open an account because Mrs. Seller is "red flagged" in the system. Mr. Seller quickly endorses the back of the check, leaves and goes home.

Mrs. Seller decides to drive to OUR bank - the bank who issued the cashiers check - and see if THEY will cash the check. Our bank will be very happy to cash the check provided she opens an account which she CAN'T because she's "red flagged" - soooooooooo, we get the first of several screaming calls that we have to help her, etc.

We explain that we can't change banking rules, etc., we suggest she open an account. It this point you must understand that we did NOT understand that she really COULDN'T open an account. The impression we had was that she did not WANT to open an account because she was afraid that they would confiscate some of the proceeds. Frankly, I'm thinking two things - babe - you're on your own; and I want to take another close look at that file!

Anyway, she makes it out to the west coast and can't open an account out there because the check has been endorsed by her husband who is still back HERE under house arrest. So I suggest she send the check back to me and we'll figure something out.

We'll get her husband to sign a release and I'll wire the funds.


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